Note 3 - Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Fair Value Disclosures [Text Block]

3

.

Fair Value of Financial Instruments

Fair value can be measured using valuation techniques such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). Accounting standards utilize a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into

three

broad levels. The following is a brief description of those levels:

Level

1:

Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level

2:

Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets or similar assets or liabilities in markets that are

not

active.

Level

3:

Unobservable inputs that reflect the reporting entity’s own assumptions.

The carrying amount and fair value of financial instruments were approximately as follows:

	Carrying		Fair
Description	Amount		Value		Level 1		Level 2		Level 3
June 30, 2018
Long-term debt	$	2,855,861	$	2,855,861		-	$	2,855,861		-
Note receivable		1,463,926		1,579,000		-		1,579,000		-
Marketable securities		331,000		331,000	$	331,000		-		-
December 31, 2017
Long-term debt	$	3,045,421	$	3,045,421		-	$	3,045,421		-
Note receivable		1,521,005		1,684,000		-		1,684,000		-
Marketable securities		330,000		330,000	$	330,000		-		-

Long-term debt

: The fair value of the Company’s term and revolver loans approximate carrying value as these loans were incurred within the past year and have variable market-based interest rates that reset every

thirty

days.

Note receivable

: The Company’s note receivable is a variable rate residential mortgage-based financial instrument. An average of published interest rate quotes for a

fifteen

-year residential jumbo mortgage, a comparable financial instrument, was used to estimate fair value of this note receivable under a discounted cash flow model.

Marketable securities

: The assets (trading securities) of the Company’s Supplemental Executive Retirement Plan are recorded at fair value on a recurring basis, and are presented within Other Assets in the consolidated balance sheets.

The carrying value of other financial instruments, including cash, accounts receivable and accounts payable, and accrued liabilities approximate fair value due to their short maturities or variable-rate nature of the respective balances.